Three essays in operations management

Abstract

This thesis aims to contribute to two streams of literature in supply chain management and in platform operations. The thesis consists of three essays. The first essay studies firms’ product reliability and extended warranty (EW) pricing deci- sions under different supply chain structures. Using a game-theoretic model, we look at three supply chains: a centralized supply chain in which the manufacturer sells products and optional EWs directly to consumers (Model C), and two decentralized models in which products and EWs are sold through a retailer with the EW offered by the manufacturer (Model M) or a third-party insurer (Model I). We also examine cases in which consumers cannot observe product reliability and investigate the impact of unobservable reliability. This essay offers guidelines on how firms should determine product reliability and EW prices in different supply chains, and sheds light on where a retailer should source EWs based on whether reliability is observable to consumers or not. Also, the results highlight the importance of establishing a mechanism to credibly disclose product reliability information to consumers. The second essay investigates supplier encroachment in which the supplier has an option to match the direct selling price with that in the retailing channel (i.e., “price-matching”) and the retailer pursues surplus generated for consumers along- side financial goals (i.e., “dual-purpose”). This essay generates several interesting findings. First, the price-matching commitment can benefit or hurt the dual-purpose retailer under certain conditions, which contrasts to our intuition that the price- matching policy alleviates channel conflicts and benefits the retailer. Second, the retailer’s pursuit of consumer surplus may hurt consumers compared to the case with a profit-maximizing retailer. This study contributes to extant literature and provides managerial implications for practitioners. The third essay, aiming to address the demand-supply imbalance in ride-hailing platforms, proposes two novel operational schemes for shifting the supply during off-peak periods to meet the demand during peak periods. Specifically, under the qualification scheme, only drivers who work up to a peak-period target are eligible to serve off-peak demand, and under the prioritization scheme, drivers who work up to a peak-period target are given priority to serve off-peak passengers. Using a model capturing the supply-demand imbalance and drivers’ strategic work time allocation, we show that both schemes increase the transaction volume. In addition, if adopting an open system where part-time drivers can provide service, a platform prefers the prioritization scheme. In contrast, for platforms that solely rely on full-time drivers (i.e., closed system), the qualification scheme is better. We further show that the combination of an open system and a prioritization scheme is the most effective in solving the supply-demand imbalance. Our results have general implications for on-demand platforms (e.g., ride-hailing, food delivery and freelance platforms) in resolving the challenge of supply-demand mismatch.